Real Estate Investor Magazine South Africa March 2015 | Page 35

3) Risk control
The risks can be managed effectively by selecting
one, or a combination, of the four responses to risk.
• Avoiding risk, for example, eliminating interest rate
risk by paying cash for the property.
• Transferring risk to another party through insurance,
outsourcing or partnerships.
• Mitigating risk by implementing, for example,
preventative measures and contiguency planning.
• Accepting risk – accepting some or all of the
consequences of a particular risk.
4) Ongoing monitoring and improvement
Ongoing monitoring of the risk management
strategy will answer questions such as:
• Have the probability and consequences of the risks
changed?
• What new risks have emerged?
• Is the risk management option still effective and cost
efficient? How can it be improved?
Buy-to-let risk management
Cost-effective risk management solutions designed
specifically for property investors have evolved over
the years as property experts identified and refined the
best ways to mitigate, manage and even eliminate these
common risks.
For example, there are specialised insurance policies
for landlords that protect against damage to the
property and liability, including cover against lost
income if the premises are rendered uninhabitable by a
fire or flood. Rental insurance transfers the risk of late
or non-payment of rentals to an insurer, and provides
cover for the costs related to evictions. Installing prepaid water and electricity meters eliminates the risk of
tenants not paying their utility bills.
While buy-to-let property investment is inherently
a lower-risk option than traditional asset classes, it also
allows investors to mitigate - if not eliminate - the
risks that do exist. In doing so, they do not sacrifice
the returns on the investment, but rather enhance
these. A well-chosen property, in a good area, with
solid rental demand and good prospects for long-term
capital growth; acquired by implementing a proven
system with built-in risk management strategies (like
the P3 Investment System) creates a virtually risk-free
investment that produces impressive annual returns.

RESOURCES
P3 Investment Group
www.reimag.co.za